COMMISSIONER OF INCOME-TAX vs. KASHIRAM TEXTILES MILLS PVT LTD.

PDF · subscribers
ITR/206/1984HC GujaratGJHC24011880198417 December 1998Author: HONOURABLE MR. JUSTICE R.BALIA,HONOURABLE MR. JUSTICE ANIL R. DAVE3 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that the issue regarding whether the assessee's activities amounted to manufacturing and consequently its entitlement to initial depreciation was no longer res integra. The Supreme Court, in the case of Ujagar Prints vs. Union of India and others, 179 ITR 317, had held that similar activities constitute manufacturing. Therefore, the High Court answered the first two questions in favour of the assessee and against the revenue. It concluded that the assessee was engaged in the business of manufacturing textiles and was entitled to initial depreciation. In light of these findings, the third question raised at the instance of the assessee regarding the CIT's jurisdiction under Section 263 was rendered academic, and the High Court declined to answer it. No order as to costs was made.

What were the facts?

The assessee, Kashiram Textiles Pvt Ltd, for assessment year 1976-77, claimed to be engaged in the business of manufacturing textiles. Its activities involved purchasing gray cloth, subjecting it to bleaching, dyeing, printing, calendering, and starching, and then selling it as finished products. The assessee claimed initial depreciation under Section 32(1)(vii) of the Income Tax Act, 1961. The Income Tax Appellate Tribunal (ITAT) found that these activities did not amount to manufacturing and therefore the assessee was not entitled to initial depreciation. The Commissioner of Income-tax (CIT) had also assumed jurisdiction under Section 263 of the Act. Three questions were referred to the High Court for its opinion: whether the assessee was engaged in manufacturing textiles, whether it was entitled to initial depreciation, and whether the CIT could validly assume jurisdiction under Section 263.

What were the issues?

The High Court was asked to decide three questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in concluding that the assessee was engaged in the business of manufacturing textiles (Section 2(29) of the Income Tax Act, 1961). 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in concluding that the assessee was entitled to initial depreciation under Section 32(1)(vii) of the Income Tax Act, 1961. 3. Whether, on the facts and in the circumstances of the case, the CIT could validly assume jurisdiction under Section 263 of the Income Tax Act, 1961, even when the assessment was framed under Section 143(3) read with Sections 144A and 144B of the Act. Assessee's contentions: The assessee argued that its activities constituted manufacturing and it was entitled to initial depreciation. It also questioned the validity of the CIT's assumption of jurisdiction under Section 263. Revenue's contentions: The revenue contended that the assessee's activities did not amount to manufacturing and therefore it was not entitled to initial depreciation. The revenue sought to uphold the Tribunal's findings on these points.

Which sections of the Income-tax Act were involved?

Section 32(1)(vii),Section 143(3),Section 144A,Section 144B,Section 263

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 206 of 1984

For Approval and Signature:

Hon'ble MR.JUSTICE R.BALIA. and MR.JUSTICE A.R.DAVE ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements?

2.

To be referred to the Reporter or not?

3.

Whether Their Lordships wish to see the fair copy of the judgement?

4.

Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge?

-------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus KASHIRAM TEXTILES MILLS PVT LTD. -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner MR BD KARIA, WITH MR. RK PATE WITH MR KC PATEL for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE R.BALIA. and MR.JUSTICE A.R.DAVE Date of decision: 17/12/98

ORAL JUDGEMENT

1.

In its statement of case submitted by the Income Tax Appellate Tribunal, Ahmedabad Bench A, three questions have been referred to this court for its opinion arising out of appellate order in ITA No.

726/Ahd/81 for assessment year 1976-77. The two questions referred at the instance of revenue and another question referred to this court at the instance of assessee respectively are as under:

At the instance of CIT -

"(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the assessee could be said to be engaged in the business of manufacturing textiles?

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the assessee was entitled to initial depreciation under Section 32(1)(vi) of the Income Tax Act, 1961?"

At the instance of assessee -

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the CIT could validly assume juri iction under section 263 of the I.T. Act, 1961 even when the assessment is framed under Section 143(3) read with Section 144A and Section 144B of the Act?"

2.

The Tribunal has found that the business activity of the assessee at the material time consisted of purchase of gray cloth, colour, chemicals etc. and subjecting that cloth to bleaching, dyeing, printing, calendering, starching and then selling it as finished products like `printed chhint' by claiming that the (A.R. Dave, J)

More judgments on Section 144A

All 176 judgments and leading authorities on Section 144A →

Recent GST High Court judgments

Search GST case law →